Sale process underway for TPG’s WellSky

Goldman Sachs and William Blair are advising the healthcare technology giant.

TPG is evaluating the sale of WellSky, the software company serving post-acute-care providers among other healthcare settings, according to five sources familiar with the matter. 

Goldman Sachs and William Blair are offering sell-side financial advice, the people said. 

WellSky, formerly Mediware Information Systems, posts annual EBITDA of approximately $150 million, sources said. The company could fetch a valuation around $3 billion in a potential transaction, some of the people said. 

The Overland Park, Kansas, healthcare technology company was marketed to a group of large buyout funds, with the process expected to soon narrow. The process was always targeting a spring launch, but was delayed a bit due to the environment, one of the people said. The parties hope to get a deal done relatively quickly, another said.

Different transaction structures have been considered, including one that would result in 51-49 or 50-50 joint ownership leaving WellSky’s existing capital structure in place, some of the sources said. At the same time, bidders won’t have trouble securing a good staple financing, with large banks willing to do a syndicated loan deal, sources said. 

One party is also looking at taking a preferred equity position, a source said.

WellSky was founded in 1980 as Mediware, with its clinical software then tailored to blood banks. The company transformed significantly in the period since, with a number of different owners, and more recently, a slew of M&A.  

Today WellSky provides software-as-a-service and other software platforms to more than 14,000 sites worldwide across post-acute care, non-acute care and community-based sites of care. The company’s partners include hospital systems, blood banks and labs, home health and hospice groups, government agencies and human services organizations. 

Besides an attractive SaaS-based business model – serving end markets minimally impacted by covid-19 – one source noted that revenue is growing at a compound annual growth rate in the low teens.

Bill Miller since 2017 has led the company as CEO. Miller is the former CEO of Optuminsight, a division of UnitedHealth Group’s Optum.

TPG completed its acquisition of WellSky from Thoma Bravo in February 2017. The latter a little more than four years earlier took the company private for $194.6 million in cash. 

Fueled largely by an aggressive M&A playbook, WellSky under TPG has expanded its offerings significantly. 

Notable transactions include its purchase of Kinnser Software in 2017, having preempted a William Blair auction at the time. The deal gave WellSky an immediate foothold in the home health and hospice care end markets. 

Terms weren’t disclosed, but Kinnser was expected to command 17x to 20x its about $24 million of EBITDA, sources familiar with the matter told PE Hub at the time. That would suggest a deal valued north of $400 million. 

WellSky’s 2018 deals included Fazzi Associates, MEDTranDirect, Rock-Pond, BlueStrata and Consolo Services Group. 

More recently, the company in late 2018 snapped up ClearCare, expanding further into the home setting as it added the Battery Ventures-backed provider of non-medical home care software. It bought HCS the same year, a software maker for long-term acute care. 

TPG and Goldman Sachs declined to comment. WellSky and William Blair didn’t return requests for comment on Wednesday.

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